MUMBAI, India, January 27, 2016 /PRNewswire/ -- Indian business sentiment rose for the first time in three months to the highest since October 2015 as domestic orders strengthened at the start of the year.
The MNI India Business Sentiment Indicator, a gauge of current sentiment among BSE-listed companies, rose to 61.8 in January from 60.7 in December. The rise in sentiment was observed across both manufacturing and service companies, while sentiment among construction sector companies fell. Although the indicator was above the 50 level that separates expansion from contraction, it was 3.7% below the outturn of January 2015.
Asked specifically about the impact of the Modi government on businesses, 17% of respondents reported that their business performance was better under the new government. Many said the quicker clearance and implementation of business proposals was benefitting the business environment. Nevertheless, 56.8% of our panel reported that their business had been unaffected by the government's policies, while 4.3% thought that business had worsened. A significant proportion, 22% of respondents, said that it was too early to draw any conclusions.
While companies were more confident about the current business environment, their expectations for the next three months lacked spark. In January, the Expectations Indicator eased to 71.6 from 74.3 in December, 5.9% down on the year. Firms were also less bullish about Production, Employment and Availability of Credit over the coming quarter. One change from previous months was that firms were more optimistic about demand. The Expectations Indicator for New Orders was up 2.6% on the month. This is a tentative sign that the prolonged deterioration in domestic demand conditions may be coming to an end.
Commenting on the latest survey, Chief Economist of MNI Indicators Philip Uglow said, "On the whole the January survey was a little more positive, although not unanimously so. On the brighter side overall sentiment was up, supported by the first increase in New Orders since last June. Against this Production continued to trend lower and the Export Orders Indicator weakened."
"While just under one-fifth of the panel thought the Modi government has had a positive impact on their business, over 50% said that they had not seen any impact. To change this perception, the government should quicken its steps at reforming the economy."
Notes to Editors
Please source all information to MNI Indicators.
MNI India Business Sentiment is a monthly poll of Indian business executives at companies listed on BSE (formerly known as the Bombay Stock Exchange). Companies are a mix of manufacturing, service, construction and agricultural firms.
Respondents are asked their opinion on whether a particular business activity has increased, decreased or remained the same compared with the previous month as well as their expectations for three months ahead, e.g. is Production higher/same/lower compared with a month ago?
Diffusion indicators are then calculated by adding the percentage share of positive responses to half the percentage of those respondents reporting no change. An indicator reading above 50 shows expansion, below 50 indicates contraction and a result of 50 means no change.
Data is collected via telephone interviews. Around 400 companies are surveyed each month. The survey has been in place since November 2012.
About MNI Indicators
MNI Indicators, part of Deutsche Brse Group, offers unique macro-economic data and insight to businesses and the investment community. We produce data and intelligence that is unbiased, pertinent and responsive. Our data moves markets.
For more information, visit our website at www.mni-indicators.com.
